The Michigan Personal Residence Property Exemption

In Michigan, as in many other states, municipal, school, and city funding is financed partially through property taxes.  In addition to a monthly mortgage, the average homeowner can expect to pay some amount in taxes on their property in order to provide support for these entities.  Fortunately, homeowners have the option of claiming a personal residence exemption which limits the amount of taxes they will see on their monthly bill.

The personal residence exemption, also known as the “homestead exemption” is a tax exemption which applies to property being used as the permanent, primary, personal residence of the owner.  This exemption provides you with a reduced tax bill based on the fact that you laive in the home being taxed.  Another property, such as a rental home or family cottage, which is not your primary residence will not qualify for this exemption.  Generally, in order qualify for the exemption, you must file a form with your local tax assessor called the Affidavit of Personal Residence before May 1 of the taxing year.  If you buy your home after May 1 and the previous owner has filed an exemption, the former owner’s exemption should be honored through the end of the year.  However, you will need to file your own affidavit before May 1 of the next taxing year. Generally, the exemption may extend to the land which is attached to the property provided it is all residential, the land is vacant, meaning no other distinct structures are built on the land, and it is not being used for non-residential purposed.

A Michigan homeowner is only entitled to one personal residence exemption.  To claim the exemption, you must be a Michigan resident who has not made this kind of claim for exemption in another state. The property must be owned by a person for the exemption to be effective.  Meaning a corporate entity or partnership will not be able to benefit from the exemption.  People who equally co-own property, or joint tenants, can claim the exemption separately from one another as long as the property qualifies as their personal residence.

This exemption serves homeowners in terms of keeping their taxes lower.  Making sure that you follow the rules in invoking the exemption will ensure that you can benefit.  Our office has attorneys who are knowledgeable about Michigan real estate tax exemptions and can help you understand your choices and make informed decisions as you plan for your home.   Please contact us if we may be of assistance.

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